Conservatives councils (still) cost you less

This morning's Today programme led on promises from the great centralisers of NuLabour to decentralise power to local communities. They might be trying to steal David Cameron's localisation agenda - they were shameless in an almost word-for-word steal of one community-empowering idea during last May's election. But there are more immediate issues for local government...

The Conservatives hope to benefit from anger at the fact that council tax - Labour's favourite and very regressive stealth tax - has risen by 84% since the Blair-Brown axis came to power in 1997. The problem for the Tories is, as yesterday's Times reported, some of the biggest tax increases are being requested by Conservative councils. Eric Pickles MP, Shadow Minister for Local Government, insists, however, that Tory councils still provide better value for money:

"On average across different tiers of local government, Conservative councils charge £74 a year less on Band D bills than Labour councils and £83 a year less than Liberal Democrats."

It is good to hear a Tory frontbencher using tax as a political weapon. It is unfortunately less potent because, as Simon Heffer writes today, too many Tory councils are not doing enough to tackle waste in their local authorities:

"It used to be the case that the Tories would instinctively see the urgency of fighting such waste, but that was before the new dispensation in which public spending, in all respects, became a good in itself. There is no point the Tories attacking Labour's naked redistributionism unless they are prepared to come up with proposals to stop it. I don't just mean stopping the flow of money from the South-East to Labour's urban English fiefdoms, or the even more blatant and deeply undemocratic transfer of funds from England to Scotland, which appears to have been the hidden cost of devolution. I mean stopping redistribution from the private to the public sectors: and acknowledging the financial necessity of ending this rape of the productive parts of our economy."

ARBITRAGE

A leader in yesterday's Daily Telegraph recommends a local sales tax as a long-term solution for the problems of local government finance. It believes that such a tax - by producing different prices in different localities for shoppers to exploit - will encourage downward pressure on tax (and waste).

The problem is that various things which should be handled at a national level are handled at a local level. Housing benefit and council housing spring to mind, which are controlled and financed by local government. Or at least that is what Islington council in their helpful breakdown of where our 1,400 is going claim...

You would have areas with the most run down housing and highest levels of housing benefit having the highest sales tax. It would be like regeneration in reverse.

"You would have areas with the most run down housing and highest levels of housing benefit having the highest sales tax"

Or you would have voters realizing that something needs to be done about the problems and voting in people with innovative solutions.

The main problem with a local sales tax is actually when affluent communities can afford it. Take California, for instance, where sales taxes increase regularly and people absorb the cost without realizing that it is simply subsidizing inefficient government. The burden then falls disproportionately on the poorer inhabitants.

The reason why Conservatives ask for higher rises is because their taxes are lower to start with.

Wage inflation and more statutory services combined with reduced (in real terms) central funding leads to holes in the budgets of all councils, for Conservatives to fill the same hole they need a higher % increase.

We are having a debate in the Conservative Party about whether or not we should promise tax cuts. The argument is not about whether tax cuts are needed, they are. The argument is over whether there is any point in promising them if people don't believe we can deliver them.
But we have it within our power as a Party to cut taxes already and to prove our credentials. If every Tory Council followed the example of Wandsworth then our credibility as tax cutters would transfer to national politics. The Tory Councils which fail to cut Council Tax are letting us down.

The reason promises of tax cuts play so badly are that we didn't actually offer tax cuts (in 2005 we really offered deferred tax increases), have has unconvincing spokesmen (Letwin and Portillo), have made the case only at the last minute (say the pledges in 2005, which even then ignored why tax cuts were a good thing), and have generally failed to make the case.

Have to agree with James (there's a phrase you don't hear me say very often) about the lateness of the tax cuts case. I found the proposals on savings in particular were popular on the doorstep, but the policies were announced so late that pretty much everyone's election addresses had long been sent to the printers. Certainly it was well past CCHQ's literature pack deadline.

I agree that the Party should start making the case for tax cuts, particularly focused on those which create incentives for good behaviour (such as those on savings and creating some allowance for marriage).

But on the other hand I don't think that the idea of a sales tax is anything but a disaster - it is highly regressive and therefore, to my mind, immoral. As you (Burkean) yourself state, we all know what will happen is that middle class liberals will end up voting for it because they can afford to do so and then feel good about themselves, while those who will be really hurt will be those struggling on low to modest incomes.

Local government funding is a disaster. For once I agree with the Heffer on how the whole structure rewards waste and is obscure such that no one knows who to blame for what. Still, meddling with it is almost as disasterous...

Maybe a combination of a sales tax and income tax together could work, which would make the tax fall on everyone while making it less regressive.